Kids with average IQ more likely to build up debt as adults – dpa international


The stock market in Kuala Lumpur (Simon Roughneen)

Aristotle is reputed to have said “show me the child and I will show you the man,” or words to that effect. Now a pair of business school academics are suggesting something similar: that there is a relationship between a child’s cognitive ability and his or her finances as a grown-up.

The link varies depending on the financial measure, however, and there is no “one size fits all” outcome, according to the researchers, Joe Gladstone of the University of Colorado and Jenna Adriana Maeve Barrett of Maastricht University.

Higher cognitive ability was associated with better scores on measures such as savings and investment account ownership. Such relationships appear to be linear for most people but non-linear for those with either exceptionally high or low cognitive ability.

When it came to debt, the link was not so straightforward. People with either low or high cognitive abilities had the lowest debt, while those of average ability ended up owing the most money.

“Our study demonstrates the complex and diverse relationships between cognitive ability in childhood and financial wellbeing in adulthood,” said Gladstone and Barrett, whose work started with prior research linking between cognitive ability and financial well-being and which came with a “general assumption” the relationship was linear.

Published in the journal PLOS One, Gladstone’s and Barrett’s study was based on data on 5,858 participants in the British Cohort Study since 1970, such as cognitive abilities at age 10 and then several financial indicators in adulthood, including debt-to-income ratio, level of savings, and investment account ownership, all while accounting for the participants’ socioeconomic status as a child.

“The association is not linear or simple and understanding this can help us develop more effective interventions to enhance financial wellbeing for people with varying cognitive abilities,” they concluded.

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